Outlook for kharif crop brightens with monsoon's revival

According to latest data, crops have been sown in around 72.13 million hectares, which is 8.90 per cent less than the same period last year.

The southwest monsoon has started showing much needed signs of revival in the past few days, after a subdued spell from June-end to mid-July that fuelled inflationary concerns on the back of a dip in kharif sowing.

The rains, which are not only crucial for Indian agriculture but also have a significant bearing on the country’s overall economic sentiment, were 10 per cent above normal till end June.

But after June 19, there was virtually no rain, which left large parts of North, West and Central India parched.

Data shows that between July 1 and 18, the southwest monsoon was cumulatively 26 per cent below normal. However, there has been a revival of sorts since then and the monsoon not only enveloped the whole country but also managed to wipe off some of the deficit.

Till July 23, the southwest monsoon recorded rainfall two per cent below normal.

For the week ended July 23, 35 per cent of the country’s 694 districts received deficient rain, as against 42 per cent during the previous week. According to a Crisil Research report released last week, northwest India recorded a high deficit of 55 per cent between June 23 and July 12.

There was a 58 per cent deficit in rains between June 23 and July 12 over Rajasthan and the shortfall in Central India was 39 per cent during this period, with Gujarat accounting for 67 per cent of the shortage.

The uneven showers and the long gap between them impacted sowing of kharif crops and cast a huge shadow on their final yields, particularly of the early sown varieties.

However, as things improve, most experts and analysts believe that the progress of the southwest monsoon would be the most crucial factor and keenly watched over the next few weeks to determine the final output.

Sowing gathers steam

After a lull for most of July, sowing of kharif crops picked up during the week ended July 23. According to latest data, crops have been sown in around 72.13 million hectares, which is 8.90 per cent less than the same period last year.

Sowing of kharif crops was 11.5 per cent lower than the same period last year (till July 16), continuing a slide from 10.45 per cent during the previous week (till July 9).

Sowing was down almost four per cent of the normal area till July 16.

Among major crops, as on July 23, acreage of urad is almost 23 per cent lower than last year, while that of moong is about 18 per cent lower and bajra acreage is down 29.16 per cent. The area for groundnut cultivation is 13.16 percent lower (as of July 23, 2021) than last year, while soybean acreage is 8.74 per cent less.

Cotton has been planted in 7.71 per cent less area till July 23 as compared to the same period last year.

Though still less than last year, the area covered has shown a far better improvement as compared to the previous week because of the steady revival of monsoon.

Impact on prices

Among all the crops, sowing of pulses and oilseeds and their final output will be most keenly watched, as any drop in their acreage could further aggravate the already high retail prices and jeopardise not only household budgets but also the government’s inflation math.

This is all the more vital as edible oil along with pulses are among the high-consumption items during the festival season that starts in August.

There is no such fear in the case of rice -- the biggest food grain grown during the kharif season -- as the country has sufficient reserves.

Edible oil prices in the domestic markets have risen sharply during the past one year, with retail rates of some, such as soybean oil, rising from around Rs 118 per litre in July 22, 2020, to almost Rs 160 this month in Delhi markets.

Prices of other edible oils have also risen sharply in the last few months.

The main reason for this is a spike in global markets as India imports more than 60 per cent of its annual requirement of edible oils.

In the case of pulses, too, data shows that prices had risen sharply in April and May. After a series of measures were announced, prices have cooled down but are still 6-15 per cent higher than those of last year for most major pulses, including arhar, urad and masoor.

Traders and market watchers said that with international markets of both pulses and edible oils expected to rule due to rising demand and low output in major producers, inflation in both commodities could be firm at least until December after which the new domestic kharif crop will hit the market.

The current bout of rains will thus act as a much needed booster, but the remainder of the season would be watched keenly because any extended break now could have an adverse impact on the final output.